US Internal Revenue Service: irb04-09

8/14/2019 US Internal Revenue Service: irb04-09

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Bulletin No. 2004-March 1, 200

HIGHLIGHTS

OF THIS ISSUEThese synopses are intended only as aids to the reader inidentifying the subject matter covered. They may not berelied upon as authoritative interpretations.

INCOME TAX

T.D. 9112, page 523.Final regulations under section 42 of the Code remove animpediment to the electronic filing of Form 8609, Low-IncomeHousing Credit Allocation Certification. Regulations section1.421T(h) impeded electronic filing of the form by requiring a

taxpayer to include a third-party signature from an authorizedstate or local housing credit agency official when filing theform. This regulation eliminates that requirement.

T.D. 9113, page 524.REG16721703, page 540.Final, temporary, and proposed regulations under section6038A of the Code amend existing regulations to providethat a Form 5472 that is timely filed electronically is treatedas satisfying the requirement timely to file a duplicate Form5472 with the Internal Revenue Service Center in Philadelphia,Pennsylvania. The regulations affect corporations subject to

the reporting requirements in sections 6038A and 6038Cthat file Form 5472 electronically. A public hearing on theproposed regulations is scheduled for May 27, 2004.

Notice 200415, page 526.This notice concludes that taxpayers may use the methodologyset forth in Rev. Rul. 200262, 20022 C.B. 710, to deter-mine penalty tax implications and whether a distribution froman annuity contract is part of a series of substantially equal pe-riodic payments under section 72(q)(2) of the Code.

Notice 200416, page 527.This notice provides relief from the application of the informtion reporting rules set forth in Rev. Rul. 200343, 2003C.B. 935, with respect to payments for medical care undhealth flexible spending arrangements and health reimbursment arrangement.

Rev. Proc. 200412, page 528.This procedure provides guidance on how a state electshealth program to be qualified health insurance for purposof the health coverage tax credit (HCTC) under section 35 the Code.

Rev. Proc. 200418, page 529.This procedure provides issuers of qualified mortgage bonand qualified mortgage credit certificates with average arpurchase price safe-harbors for statistical areas in the UnitStates and with a nationwide average purchase price for redences in the United States for purposes of the mortgage renue bond rules under section 143 of the Code (and the mo

gage credit certificate rules under section 25). Rev. Proc8719, 9315, and 9455 obsoleted in part.

Announcement 200413, page 543.This document contains a notice of a public hearing on pposed regulations (REG16397402, 200338 I.R.B. 59which propose removing provisions of the regulations that aply a look-through rule to assets of a nonregistered partnershfor purposes of satisfying the diversification requirements section 817(h).

(Continued on the next pag

Finding Lists begin on page ii.


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EMPLOYEE PLANS

Notice 200414, page 526.Weighted average interest rate update. The weighted av-erage interest rate for February 2004 and the resulting permis-sible range of interest rates used to calculate current liabilityand to determine the required contribution are set forth.

EXEMPT ORGANIZATIONS

Announcement 200412, page 541.A list is provided of organizations now classified as private foun-dations.

March 1, 2004 2004-9 I.R.B.


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The IRS Mission

Provide Americas taxpayers top quality service by helpingthem understand and meet their tax responsibilities and by

applying the tax law with integrity and fairness to all.

Introduction

The Internal Revenue Bulletin is the authoritative instrument ofthe Commissioner of Internal Revenue for announcing officialrulings and procedures of the Internal Revenue Service and forpublishing Treasury Decisions, Executive Orders, Tax Conven-tions, legislation, court decisions, and other items of generalinterest. It is published weekly and may be obtained from theSuperintendent of Documents on a subscription basis. Bul-letin contents are consolidated semiannually into CumulativeBulletins, which are sold on a single-copy basis.

It is the policy of the Service to publish in the Bulletin all sub-

stantive rulings necessary to promote a uniform application ofthe tax laws, including all rulings that supersede, revoke, mod-ify, or amend any of those previously published in the Bulletin.All published rulings apply retroactively unless otherwise indi-cated. Procedures relating solely to matters of internal man-agement are not published; however, statements of internalpractices and procedures that affect the rights and duties oftaxpayers are published.

Revenue rulings represent the conclusions of the Service on theapplication of the law to the pivotal facts stated in the revenueruling. In those based on positions taken in rulings to taxpayersor technical advice to Service field offices, identifying detailsand information of a confidential nature are deleted to preventunwarranted invasions of privacy and to comply with statutoryrequirements.

Rulings and procedures reported in the Bulletin do not have theforce and effect of Treasury Department Regulations, but theymay be used as precedents. Unpublished rulings will not berelied on, used, or cited as precedents by Service personnel inthe disposition of other cases. In applying published rulings andprocedures, the effect of subsequent legislation, regulations,

court decisions, rulings, and procedures must be considereand Service personnel and others concerned are cautionagainst reaching the same conclusions in other cases unlethe facts and circumstances are substantially the same.

The Bulletin is divided into four parts as follows:

Part I.1986 Code.This part includes rulings and decisions based on provisions the Internal Revenue Code of 1986.

Part II.Treaties and Tax Legislation.This part is divided into two subparts as follows: SubpartTax Conventions and Other Related Items, and Subpart B, Leislation and Related Committee Reports.

Part III.Administrative, Procedural, and MiscellaneouTo the extent practicable, pertinent cross references to thesubjects are contained in the other Parts and Subparts. Alincluded in this part are Bank Secrecy Act Administrative Rings. Bank Secrecy Act Administrative Rulings are issued the Department of the Treasurys Office of the Assistant Se

retary (Enforcement).

Part IV.Items of General Interest.This part includes notices of proposed rulemakings, disbment and suspension lists, and announcements.

The last Bulletin for each month includes a cumulative indfor the matters published during the preceding months. Themonthly indexes are cumulated on a semiannual basis, and apublished in the last Bulletin of each semiannual period.*

The contents of this publication are not copyrighted and may be reprinted freely. A citation of the Internal Revenue Bulletin as the source would be appropria

For sale by the Superintendent of Documents, U.S. Government Printing Office, Washington, DC 20402.

* Beginning with Internal Revenue Bulletin 200343, we are publishing the index at the end of the month, rather than at the beginning.

2004-9 I.R.B. March 1, 200


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Part I. Rulings and Decisions Under the Internal Revenue Codeof 1986Section 42.Low-IncomeHousing Credit

26 CFR 1.421: Limitation on low-income housing

credit allowed with respect to qualified low-income

buildings receiving housing credit allocations from a

state or local housing credit

T.D. 9112

DEPARTMENT OF THETREASURYInternal Revenue Service26 CFR Part 1

Low-Income Housing CreditAllocation Certification;Electronic Filing

AGENCY: Internal Revenue Service

(IRS), Treasury.

ACTION: Final regulations.

SUMMARY: This document contains reg-

ulations that facilitate the electronic fil-

ing of Form 8609, Low-Income Hous-

ing Credit Allocation Certification. The

regulations affect taxpayers who file Form

8609.

DATES: Effective Date: These regulationsare effective January 27, 2004.

Applicability Date: For date of applica-

bility, see 1.421(j).

FOR FURTHER INFORMATION

CONTACT: Paul F. Handleman, (202)

6223040 (not a toll-free number).

SUPPLEMENTARY INFORMATION:

Background

In 1998, Congress enacted the Inter-

nal Revenue Service Restructuring and

Reform Act of 1998 (RRA 1998), Public

Law 105206 (112 Stat. 685) (1998). Sec-

tion 2001(a) of RRA 1998 states that the

policy of Congress is that paperless filing

should be the preferred and most conve-

nient means of filing Federal tax returns.

Section 2001(a) of RRA 1998 also sets a

long-range goal for the IRS to have at least

80 percent of all Federal tax returns filed

electronically by 2007. Section 2001(b) of

RRA 1998 requires the IRS to establish a

10-year strategic plan to eliminate barriers

to electronic filing.

The IRS has identified 1.421T(e)(1)

and (h)(2) as regulatory provisions thatimpede electronic filing of Form 8609,

Low-Income Housing Credit Allocation

Certification, by requiring a taxpayer to

include a third-party signature from an

authorized State or local housing credit

agency (Agency) official when filing the

form. This Treasury decision eliminates

that requirement.

Explanation of Provisions

Section 42 provides for a low-income

housing credit that may be claimed as partof the general business credit under sec-

tion 38. In general, the credit is allowable

only if the owner of a qualified low-in-

come building receives a housing credit al-

location from an Agency of the jurisdiction

where the building is located.

Section 1.421T(d)(8)(ii) provides that

housing credit allocations are deemed

made when Part I of Form 8609 is com-

pleted and signed by an authorized Agency

official and mailed to the owner of the

qualified low-income building. Under

1.421T(e)(1), an owner is required tocomplete the Form 8609 on which the

Agency made the applicable housing

credit allocation and submit a copy of

it with the owners Federal income tax

return for each year in the compliance

period. Under 1.421T(h)(2), the owner

is required to file a completed Form 8609

(or copy thereof) with the owners Fed-

eral income tax return for each of the 15

taxable years in the compliance period.

Section 1.421T(h)(2) also provides other

rules for completing Form 8609.

This Treasury decision facilitates

the electronic filing of Federal tax re-

turns by eliminating the requirements in

1.421T(e)(1) and (h)(2) that an owner

file a copy of the completed Form 8609

that is signed by the authorized Agency

official with the owners Federal income

tax return for each of the 15 taxable years

in the compliance period. Notwithstand-

ing that the owner need not file a copy

of the Form 8609 signed by the Agenc

official, the building owner must con

tinue to retain that form for 3 years afte

the due date, including extensions, of th

building owners tax return for the ta

year that includes the end of the 15-yeacompliance period. The other rules i

1.421T(h)(2) for completing Form 860

are also deleted. The requirements fo

completing and filing Form 8609 are ad

dressed in the instructions to the form.

Special Analysis

It has been determined that this Trea

sury decision is not a significant regula

tory action as defined in Executive Orde

12866. Therefore, a regulatory assessmen

is not required. It also has been determinethat section 553(b) and (d) of the Admin

istrative Procedure Act (5 U.S.C. chapte

5) does not apply to these regulations. Be

cause no notice of proposed rulemaking i

required, the Regulatory Flexibility Act (

U.S.C. chapter 6) does not apply. Pursuan

to section 7805(f) of the Internal Revenu

Code, these regulations were submitted t

the Chief Counsel for Advocacy of th

Small Business Administration for com

ment on their impact on small business.

Drafting Information

The principal author of these regula

tions is Paul F. Handleman, Office of th

Associate Chief Counsel (Passthrough

and Special Industries), IRS. Howeve

other personnel from the IRS and Treasur

Department participated in their develop

ment.

* * * * *.

Adoption of Amendments to the

Regulations

Accordingly, 26 CFR part 1 is amende

as follows:

PART 1INCOME TAXES

Paragraph 1. The authority citation fo

part 1 continues to read in part as follows

Authority: 26 U.S.C. 7805 * * *

Section 1.421 also issued under 2

U.S.C. 42(n); * * *

2004-9 I.R.B. 523 March 1, 200


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Par. 2. Section 1.421 is added to read

as follows:

1.421 Limitation on low-income

housing credit allowed with respect to

qualified low-income buildings receiving

housing credit allocations from a State or

local housing credit agency.

(a) through (g) [Reserved]. For furtherguidance, see 1.421T(a) through (g).

(h) Filing of forms. A completed Form

8586, Low-Income Housing Credit,

must be filed with the owners Federal

income tax return for each taxable year the

owner of a qualified low-income building

is claiming the low-income housing credit

under section 42(a). A completed Form

8609, Low-Income Housing Credit Allo-

cation Certification, must be filed with

the owners Federal income tax return for

each of the 15 taxable years of the com-

pliance period. Failure to comply with therequirement of the preceding sentence for

any taxable year after the first taxable year

in the credit period will be treated as a

mathematical or clerical error for purposes

of section 6213(b)(1) and (g)(2).

(i) [Reserved]. For further guidance,

see 1.421T(i).

(j) Effective date. Section 1.421(h) ap-

plies to forms filed on or after January 27,

2004. The rule that applies for forms filed

before January 27, 2004, is contained in

1.421T(h) in effect before January 27,

2004 (see 26 CFR part 1 revised as of April

1, 2003).

Par. 3. Section 1.421T is amended by:

1. Removing the last two sentences in

paragraph (e)(1).

2. Revising paragraph (h).

The revision reads as follows:

1.421T Limitation on low-income

housing credit allowed with respect to

qualified low-income buildings receiving

housing credit allocations from a State or

local housing credit agency (temporary).

* * * * *

(h) Filing of forms. For further guid-

ance, see 1.421(h).

* * * * *

Mark E. Matthews,

Deputy Commissioner for

Services and Enforcement.

Approved January 19, 2004.

Pamela F. Olson,

Assistant Secretary of the Treasury.

(Filed by the Office of the Federal Register on January 26,2004, 8:45 a.m., and published in the issue of the FederalRegister for January 27, 2004, 69 F.R. 3826)

Section 72.Annuities;Certain Proceeds of

Endowment and LifeInsurance Contracts

This notice concludes that taxpayers may use the

methodology set forth in Rev. Rul. 200262 to deter-

mine whether a distribution from an annuity contract

is part of a series of substantially equal periodic pay-

ments under section 72(q)(2). See Notice 2004-15,

page 526.

Section 6038A.Infor-mation With Respect toCertain Foreign-Owned

Corporations26 CFR 1.6038A2: Requirement of return.

T.D. 9113

DEPARTMENT OF THETREASURYInternal Revenue Service26 CFR Part 1

Electronic Filing of DuplicateForms 5472

AGENCY: Internal Revenue Service

(IRS), Treasury.

ACTION: Final and temporary regula-

tions.

SUMMARY: This document contains final

and temporary regulations providing that

a Form 5472 that is timely filed electron-

ically is treated as satisfying the require-

ment timely to file a duplicate Form 5472

with the Internal Revenue Service Center

in Philadelphia, Pennsylvania. This actionis necessary to clarify how the duplicate

filing requirements for Form 5472 apply

when a reporting corporation electroni-

cally files its income tax return (including

any attachments such as Form 5472). This

document affects corporations subject to

the reporting requirements in sections

6038A and 6038C that file Form 5472

electronically. The text of the temporary

regulations also serves as the text of the

proposed regulations (REG16721703)

set forth in this issue of the Bulletin.

DATES: Effective Date: These regulations

are effective February 9, 2004.

Applicability Date: For the dates of

applicability, see 1.6038A2(h) and

1.6038A2T(h).

FOR FURTHER INFORMATIONCONTACT: Edward R. Barret, (202)

4355265 (not a toll-free number).

SUPPLEMENTARY INFORMATION:

Background

Section 6038A of the Internal Rev-

enue Code (Code) requires information

reporting by 25percent foreign-owned

domestic corporations with respect to cer-

tain transactions between such domestic

corporations and foreign or domestic re-

lated parties. Section 6038C of the Code

requires foreign corporations engaged in a

trade or business within the United States

at any time during a taxable year to re-

port the information described in section

6038A with respect to certain transactions

between such foreign corporations and

foreign related parties. On June 19, 1991,

the Treasury Department and the IRS

published in the Federal Register final

regulations (T.D. 8353, 19912 C.B. 402

[56 FR 28056]) under section 6038A. A

correction to T.D. 8353, 19912 C.B. 402,was published in the Federal Register on

August 23, 1991, at 56 FR 41792.

The 1991 final regulations under

section 6038A contain guidance at

1.6038A1 and 1.6038A2 regarding

the information reporting requirements

under sections 6038A and 6038C. Sec-

tion 1.6038A2(a)(1) generally requires

a reporting corporation to file a sepa-

rate annual information return on Form

5472 with respect to each related party

with which the reporting corporation has

had a reportable transaction during thetaxable year. Section 1.6038A1(c)(1)

defines a reporting corporation as either

a domestic corporation that is 25-percent

foreign-owned or a foreign corporation

engaged in a trade or business within the

United States at any time during a taxable

year. Section 1.6038A2(d) provides that

Form 5472 shall be filed with the report-

ing corporations income tax return for the

taxable year by the due date of that return.

March 1, 2004 524 2004-9 I.R.B.


6/27

A duplicate Form 5472 shall be filed at the

same time with the Internal Revenue Ser-

vice Center in Philadelphia, Pennsylvania

(the Philadelphia Service Center). Section

1.6038A2(e) provides that even if the

reporting corporations income tax return

is not timely filed, Form 5472 (with a du-

plicate to the Philadelphia Service Center)

nonetheless is required to be timely filed at

the service center where the return is due,

with a copy of Form 5472 to be attached

to the income tax return when ultimately

filed. However, neither 1.6038A2(d)

nor 1.6038A2(e) directly addresses the

duplicate filing requirements for Form

5472 when a reporting corporation elec-

tronically files its income tax return (in-

cluding any attachments such as Form

5472).

Explanation of Provisions

To clarify how the duplicate filing re-quirements for Form 5472 apply when a

reporting corporation electronically files

its income tax return (including any attach-

ments such as Form 5472), the temporary

regulations amend 1.6038A2(d) to pro-

vide that a Form 5472 that is timely filed

electronically is treated as satisfying the

requirement timely to file a duplicate Form

5472 with the Philadelphia Service Center.

Accordingly, the filing of a copy of such

timely filed electronic Form 5472 with the

Philadelphia Service Center will not be re-

quired.

The temporary regulations do not

amend the requirement of 1.6038A2(e)

that Form 5472 be timely filed (with a du-

plicate to the Philadelphia Service Center)

even if the income tax return of the re-

porting corporation is not timely filed. As

a transitional matter, for the filing season

for taxable year 2003 returns it is antici-

pated that electronic filing of Form 5472

will be possible only as an attachment to

an electronically filed income tax return;

electronic filing of Form 5472 separatelyrather than as an attachment to an elec-

tronically filed income tax return will not

be technically possible. Accordingly, if

a reporting corporations income tax re-

turn is filed after its due date (including

extensions), regardless of whether that re-

turn is filed electronically, 1.6038A2(e)

requires the reporting corporation timely

to file Form 5472 on paper (with a copy

to the Philadelphia Service Center) at the

service center where the income tax return

is due. In subsequent filing seasons, it is

anticipated that electronic filing technol-

ogy will allow separate electronic filing of

Form 5472. The Treasury Department and

the IRS intend that the guidance contained

in the amendment to 1.6038A2(d) in

these temporary regulations would apply

to any such separate electronic filing of

Form 5472. Accordingly, a Form 5472

that is timely and separately filed elec-

tronically would be treated as satisfying

the requirement timely to file a duplicate

Form 5472 with the Philadelphia Service

Center.

Similarly, an electronic attachment of

a copy of Form 5472 to an income tax

return that is not timely filed satisfies the

requirement of the second sentence of

1.6038A2(e).

Special Analyses

It has been determined that this Trea-

sury decision is not a significant regula-

tory action as defined in Executive Order

12866. Therefore, a regulatory assessment

is not required. It also has been deter-

mined that section 553(b) of the Admin-

istrative Procedure Act (5 U.S.C. chapter

5) does not apply to these regulations. For

the applicability of the Regulatory Flexi-

bility Act (5 U.S.C. chapter 6) refer to the

Special Analyses section of the preambleto the cross-reference notice of proposed

rulemaking published in this issue of the

Bulletin. Pursuant to section 7805(f) of the

Code, these regulations will be submitted

to the Chief Counsel for Advocacy of the

Small Business Administration for com-

ment on its impact on small businesses.


The principal author of these regula-

tions is Edward Barret, Office of the Asso-

ciate Chief Counsel (International). How-

ever, other personnel from the IRS and

Treasury Department participated in their

development.

* * * * *.

Amendments to the Regulations

Accordingly, 26 CFR part 1 is amended

as follows:

PART 1INCOME TAXES

Paragraph 1. The authority citation fo

part 1 continues to read in part as follows

Authority: 26 U.S.C. 7805 * * *

Par. 2. Section 1.6038A2 is amende

by revising paragraph (d) to read as fol

lows:

1.6038A2 Requirement of return.

* * * * *

(d) [Reserved]. For further guidance

see 1.6038A2T(d).

* * * * *

Par. 3. Section 1.6038A2T is added t

read as follows:

1.6038A2T Requirement of return

(temporary).

(a) through (c) [Reserved]. For furthe

guidance, see 1.6038A2(a) through (c)(d) Time and place for filing returns

A Form 5472 required under this section

shall be filed with the reporting corpora

tions income tax return for the taxabl

year by the due date (including extensions

of that return. A duplicate Form 547

(including any attachments and schedules

shall be filed at the same time with the In

ternal Revenue Service Center, Philadel

phia, PA 19255. A Form 5472 that i

timely filed electronically satisfies the du

plicate filing requirement.

(e) through (g) [Reserved]. For furtheguidance, see 1.6038A2(e) through (g)

(h) Effective date. (1) This sectio

applies for taxable years ending on or af

ter January 1, 2003. For taxable year

ending prior to January 1, 2003, se

1.6038A2(d) in effect prior to Januar

1, 2003 (see 26 CFR part 1 revised as o

April 1, 2002).

(2) The applicability of this section ex

pires on or before February 6, 2007.

Mark E. Matthews

Deputy Commissioner fo

Services and Enforcemen

Approved January 28, 2004.

Pamela F. Olson

Assistant Secretary of the Treasury

(Filed by the Office of the Federal Register on February 62004, 8:45 a.m., and published in the issue of the FederaRegister for February 9, 2004, 69 F.R. 5931)

2004-9 I.R.B. 525 March 1, 200


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Part III. Administrative, Procedural, and Miscellaneous

Weighted Average InterestRate Update

Notice 200414

Sections 412(b)(5)(B) and 412(l)(7)

(C)(i) of the Internal Revenue Code pro-

vide that the interest rates used to calculate

current liability and to determine the re-

quired contribution under 412(l) must

be within a permissible range around the

weighted average of the rates of interest

on 30-year Treasury securities during the

four-year period ending on the last day

before the beginning of the plan year.

Notice 8873, 19882 C.B. 383, pro-

vides guidelines for determining the

weighted average interest rate and the

resulting permissible range of interest

rates used to calculate current liability.

Section 417(e)(3)(A)(ii)(II) of the Code

defines the applicable interest rate, whichmust be used for purposes of determining

the minimum present value of a partici-

pants benefit under 417(e)(1) and (2),

as the annual rate of interest on 30-year

Treasury securities for the month before

the date of distribution or such other time

as the Secretary may by regulations pre-

scribe. Section 1.417(e)1(d)(3) of the In-

come Tax Regulations provides that theap-

plicable interest rate for a month is the an-

nual interest rate on 30-year Treasury se-

curities as specified by the Commissioner

for that month in revenue rulings, notices

or other guidance published in the Internal

Revenue Bulletin.

The rate of interest on 30-year TreasurySecurities for January 2004 is 4.98 percent.

Pursuant to Notice 200226, 20021 C.B.

743, the Service has determined this rate

as the monthly average of the daily deter-

mination of yield on the 30-year Treasury

bond maturing in February 2031.

The following rates were determined

for the plan years beginning in the month

shown below.

Month Year WeightedAverage

90% to 105%

PermissibleRange

90% to 110%

PermissibleRange

February 2004 5.23 4.70 to 5.49 4.70 to 5.75


The principal authors of this notice

are Paul Stern and Tony Montanaro of

the Employee Plans, Tax Exempt and

Government Entities Division. For fur-

ther information regarding this notice,

please contact the Employee Plans tax-

payer assistance telephone service at

18778295500 (a toll-free number),

between the hours of 8:00 a.m. and

6:30 p.m. Eastern time, Monday through

Friday. Mr. Stern may be reached at

12022839703. Mr. Montanaro may

be reached at 12022839714. The tele-

phone numbers in the preceding sentences

are not toll-free.

Section 72.Annuities;

Certain Proceeds ofEndowment and Life InsuranceContracts

Notice 200415

This notice provides guidance regard-

ing when a distribution from a non-quali-

fied annuity will satisfy 72(q)(2)(D) and,

therefore, be exempt from the penalty tax

imposed by 72(q)(1). Specifically, the

Internal Revenue Service (IRS) and Trea-

sury will treat a distribution as satisfying

72(q)(2)(D) if the taxpayer uses one of

the methods described in Notice 8925,

19891 C.B. 662, as modified by Rev. Rul.

200262, 20022 C.B. 710, to determine

whether the payment is part of a series of

substantially equal periodic payments.

LAW

Section 72 sets forth rules for the taxa-

tion of amounts received under an annu-

ity contract. Section 72(q)(1) imposes a

penalty tax on certain premature or early

distributions under annuity contracts equal

to ten percent of the amount that is includi-

ble in gross income. The penalty tax un-

der 72(q)(1) will not be imposed, how-

ever, if the distribution satisfies one of the

exceptions set forth in 72(q)(2). Sec-

tion 72(q)(2)(D) provides that a distribu-

tion will not be subject to the penalty tax

if it is part of a series of substantially

equal periodic payments (not less frequent

than annually) made for the life (or life

expectancy) of the taxpayer or the joint

lives (or joint life expectancies) of such

taxpayer and his designated beneficiary.

If the payments are subsequently modified,

72(q)(3) generally requires a taxpayer to

take into account the penalty tax, plus in-

terest, that would have been imposed if

72(q)(2)(D) had not applied to the prior

distributions.

Section 72(t)(1) imposes an additional

tax on premature distributions from qual-

ified annuity contracts (e.g., a 403(b)

annuity contract or a 408 individual

retirement annuity) that is similar to the

penalty tax imposed by 72(q). Section

72(t)(2)(A)(iv) also provides that the ad-ditional tax does not apply to a series of

substantially equal periodic payments and

72(t)(4) sets forth a recapture rule simi-

lar to the rule of 72(q)(3).

Notice 8925 provides guidance re-

garding the imposition of the additional tax

on distributions from qualified employee

plans, 403(b) annuity contracts, and

individual retirement annuities (IRAs).

Notice 8925 sets forth three methods

for determining whether payments to in-

dividuals from their IRAs or from their

qualified retirement plans constitute aseries of substantially equal periodic pay-

ments for purposes of 72(t)(2)(A)(iv).

The three methods are: (i) the required

minimum distribution method; (ii) the

fixed amortization method; and (iii) the

fixed annuitization method.

Under the required minimum distribu-

tion method, the annual payment for each

year is determined by dividing the account

balance for that year by the number from

March 1, 2004 526 2004-9 I.R.B.


8/27

the chosen life expectancy table for that

year. See Rev. Rul. 200262 2.02(a)

(life expectancy tables). With this method,

the account balance, the number from the

chosen life expectancy table and the result-

ing annual payments are redetermined for

each year. If this method is chosen, no

modification in the series of substantially

equal periodic payments will be deemed

to occur, even if the amount of payments

changes from year to year, provided there

is not a change to another method of deter-

mining the payments.

Under the fixed amortization method,

the annual payment for each year is deter-

mined by amortizing in level amounts the

account balance over a specified number

of years determined by using the chosen

life expectancy table and the chosen inter-

est rate. See Rev. Rul. 200262 2.02(a)

(interest rates). With this method, the ac-

count balance, the number from the chosenlife expectancy table and the resulting an-

nual payment are determined once for the

first distribution year and the annual pay-

ment is the same amount in each succeed-

ing year.

Under the fixed annuitization method,

the annual payment for each year is deter-

mined by dividing the account balance by

an annuity factor that is the present value

of an annuity of $1 per year beginning at

the taxpayers age and continuing for the

life of the taxpayer (or the joint lives of

the taxpayer and beneficiary). The annu-ity factor is derived using the mortality ta-

ble in Appendix B to Rev. Rul. 200262

and using the chosen interest rate. With

this method, the account balance, theannu-

ity factor, the chosen interest rate and the

resulting annual payment are determined

once for the first distribution year and the

annual payment is the same amount in each

succeeding year.

Prior to 2002, Notice 8925 provided

that the additional 72(t)(1) tax would

be imposed if (i) at any time before at-

taining age 591/2 a taxpayer changed thedistribution method to a method that does

not qualify for the exception, or (ii) the

taxpayer changed the distribution method

within 5 years after the receipt of the first

payment. Rev. Rul. 200262 modified

Notice 8925 by providing two exceptions

to this rule. First, an individual is not sub-

ject to the 72(t)(1) additional tax if (i) the

payments are not substantially equal be-

cause the assets in the individuals account

plan or IRA are exhausted, and (ii) the

individual followed one of the prescribed

methods of determining whether payments

are substantially equal periodic payments.

See Rev. Rul. 200262 2.03(a). Sec-

ond, an individual who begins receiving

distributions in a year using either the fixed

amortization or fixed annuitization method

may switch to the minimum distribution

method for the year of the switch, and

all subsequent years, and the change will

not be treated as a modification within the

meaning of 72(t)(4). Any subsequent

change, however, will be a modification

for purposes of 72(t)(4). See Rev. Rul.

200262 2.03(b).

APPLICATION OF NOTICE 8925, AS

MODIFIED BY REV. RUL. 200262, TO

SECTION 72(q)(2)(D).

The IRS and Treasury believe that,when the provisions of 72 are intended

to address different concerns with respect

to the treatment of qualified and non-qual-

ified annuities, it is appropriate to apply

those provisions in a different manner.

However, if the provisions of 72 are

designed to achieve the same purpose

whether or not the annuity is qualified or

non-qualified, it is appropriate to apply

that provision in the same manner to both

qualified and non-qualified annuities.

The current language of 72(q)(2) de-

rives from 1123(b)(2) of the Tax ReformAct of 1986, Pub. L. No. 99514, (the

1986 Act). The legislative history re-

lating to the 1986 Acts amendments to

72 indicates that Congress intended that

the additional income tax on early with-

drawals should be the same for all tax-

favored retirement savings arrangements

and should be increased so that the addi-

tional tax serves, in most cases, to recap-

ture a significant portion of the benefits of

deferral of tax on income. See H. Rept.

No. 99426, 99th Cong. 1st Sess. 70304

(1985), 19863 C.B. (vol. 2) 70304; S.Rept. No. 99313, 99th Cong. 2d Sess.

567 (1986), 19863 C.B. (vol. 3) 567.

The IRS and Treasury believe that be-

cause these provisions were enacted for

the same purpose it is appropriate to apply

the same methods to determine whether

a distribution is part of a series of sub-

stantially equal periodic payments. There-

fore, taxpayers may use one of the meth-

ods set forth in Notice 8925, as modi-

fied by Rev. Rul. 200262, to determin

whether a distribution from a non-quali

fied annuity contract is part of a series o

substantially equal periodic payments un

der 72(q)(2)(D).

DRAFTING INFORMATION

The principal author of this notice i

Linda K. Boyd of the Office of AssociatChief Counsel (Financial Institutions an

Products). For further information regard

ing this notice, please contact Ms. Boyd a

(202) 6223970 (not a toll-free number).

Relief From RetroactiveApplication of InformationReporting Requirementsfor Health FlexibleSpending Arrangementsand Health Reimbursement

Arrangements

Notice 200416

This notice provides that certain in

formation reporting requirements of Rev

Rul. 200343, 20031 C.B. 935, wil

not apply to payments made pursuant t

flexible spending arrangements (FSAs

or health reimbursement arrangement

(HRAs) prior to January 1, 2003.

Rev. Rul. 200343 generally addressethe issue of whether employer-provide

expense reimbursements made throug

debit cards, credit cards, and other elec

tronic media are excludable from gros

income under section 105 of the Inter

nal Revenue Code. Rev. Rul. 20034

states that payments made to medical car

providers through the use of debit, credit

and stored-value cards are reportable to th

Internal Revenue Service by the employe

on Form 1099MISC under section 604

except to the extent that the exception

provided in section 1.60413 apply.On December 8, 2003, the Medicar

Prescription Drug, Improvement, an

Modernization Act of 2003, Pub. L. No

108173, 117 Stat. 2066, (the Medicar

Act) was enacted. Section 1203 of th

Medicare Act amends the Code by addin

a new section 6041(f), which provide

that section 6041 will not apply to an

payment for medical care (as defined in

section 213(d)) made under FSAs (as de

2004-9 I.R.B. 527 March 1, 200


9/27

fined in section 106(c)(2)), or under HRAs

that are treated as employer-provided cov-

erage under accident or health plans for

purposes of section 106. This amendment

is effective for payments made after De-

cember 31, 2002.

Pursuant to section 7805(b)(8), the

Form 1099 requirement described in Rev.

Rul. 200343 will be applied without

retroactive effect for payments made un-

der FSAs and HRAs prior to January 1,

2003. This action is taken to assure em-

ployers and third party administrators that

FSA and HRA payments for medical care

will not be subject to information reporting

prior to the effective date of the amend-

ment to section 6041 in the Medicare Act.

The principal author of this notice is

Nancy Rose of the Office of Associate

Chief Counsel (Procedure and Adminis-

tration), Administrative Provisions and Ju-

dicial Practice Division. For further in-formation regarding this notice, contact

Ms. Rose at (202) 6224910 (not a toll-

free call).

Section 35.Health InsuranceCosts of Eligible Individuals

Rev. Proc. 200412

SECTION 1. PURPOSE

This revenue procedure provides guid-

ance on how a state elects a health pro-

gram to be qualified health insurance for

purposes of the health coverage tax credit

(HCTC) under section 35 of the Internal

Revenue Code.

SECTION 2. BACKGROUND

.01 On August 6, 2002, President Bush

signed into law the Trade Act of 2002 (the

Act), Pub. L. 107210, 116 Stat. 933(2002). Title II of the Act contains provi-

sions that make assistance available to cer-

tain individuals participating in the Trade

Adjustment Assistance program (TAA) or

receiving payments from the Pension Ben-

efit Guaranty Corporation (PBGC), to en-

able them to purchase health insurance.

The primary mechanism for such assis-

tance is a federal tax credit that is equal to

65 percent of the amount paid by the eligi-

ble individual for coverage for the individ-

ual and qualifying family members under

qualified health insurance. The health cov-

erage tax credit became available on De-

cember 1, 2002, and is claimed on the el-

igible individuals income tax return. Be-

ginning August 1, 2003, the HCTC is also

available on a monthly basis as the pre-

mium is paid. Under the advance HCTC

program, the governments share 65

percent of the premium amount paid by the

individual is combined with the eligible

individuals payment of the other 35 per-

cent and paid on a monthly basis, in gen-

eral to the qualified health plan in which

the individual has enrolled.

.02 There are two basic categories of

individuals who may be eligible for the

HCTC:

(1) TAA recipients (as described in sec-

tion 2.03 of this revenue procedure), and

(2) PBGC pension recipients who haveattained age 55 but who do not have Medi-

care coverage (as described in section 2.04

of this revenue procedure).

.03 A TAA recipient is any individ-

ual who is receiving a trade readjustment

allowance under the Trade Act of 1974

for any day of a month, or any individ-

ual who would be eligible for such an

allowance except that the individual has

not exhausted the individuals regular

unemployment insurance benefits. In

addition, for purposes of this revenue pro-

cedure, any individual receiving benefitsunder the alternative trade adjustment

assistance program, established under

246 of the Trade Act of 1974, 19 U.S.C.

22712275 (2003), is also a TAA recip-

ient. All TAA recipients remain eligible

for the HCTC (and thus are still consid-

ered TAA recipients) for one month after

the end of the month that their eligibility

for TAA ceases.

.04 A PBGC pension recipient is a per-

son who is receiving a benefit payment

from the PBGC for a month and who has

attained age 55 (but who is not entitled toMedicare) on the first day of the month.

.05 There are ten categories of health

insurance that may be qualified coverage

for purposes of the HCTC:

(1) COBRA coverage: Coverage un-

der a COBRA continuation provision (un-

der 4980B of the Code; part 6 of sub-

title B of title I of the Employee Retire-

ment Income Security Act of 1974, 29

U.S.C. 11611168 (2003); or title XXII

of the Public HealthService Act, 42 U.S.C.

300bb1-300bb8 (2003));

(2) State-based continuation coverage:

Coverage under a state law that requires

continuation coverage;

(3) High risk pool: Coverage offered

through a qualified state high risk pool

(as defined in section 2744(c)(2) of the

Public Health Service Act, 42 U.S.C.

300gg44(c)(2) (2003));

(4) State employees health plan: Cov-

erage under a health insurance program of-

fered for state employees;

(5) Comparable state employees health

plan: Coverage under a state-based health

insurance program that is comparable to

the health insurance program offered for

state employees;

(6) State arrangement: An arrangement

to offer coverage to HCTC eligible indi-

viduals entered into by a state with

(a) an issuer of health insurance cover-

age;

(b) an administrator;

(c) an employer; or

(d) a group health plan (including a

multiemployer plan);

(7) Private purchasing pool: Coverage

offered through a state arrangement with

a private sector health care coverage pur-

chasing pool;(8) Other state plans: Coverage under

a state-operated health plan that does not

receive any federal financial assistance;

(9) Spousal coverage: Coverage un-

der a group health plan that is available

through the employment of the HCTC el-

igible individuals spouse (but only if the

spouses employer contributes less than 50

percent of the total cost of coverage for the

spouse, the eligible individual, and any de-

pendents); and

(10) Individual health insurance: Cov-

erage under individual health insuranceif the HCTC eligible individual was cov-

ered under the insurance during the entire

30-day period that ended on the date that

the individual became separated from the

employment that qualifies the individual

as a TAA or PBGC recipient.

.06 Coverage described in paragraphs

(1), (9), and (10) of section 2.05 of this

revenue procedure COBRA coverage,

spousal coverage, and individual health in-

March 1, 2004 528 2004-9 I.R.B.


10/27

surance satisfies the requirements for

qualified health insurance for all HCTC

eligible individuals without any action re-

quired by any state.

.07 Coverage described in paragraphs

(2) through (8) of section 2.05 of this rev-

enue procedure (state-based continuation

coverage or other state-based plans) satis-

fies the requirements for qualified health

insurance only if the state elects to have

such coverage treated as qualified health

insurance and the coverage satisfies the

following requirements:

(1) Qualifying individuals (as defined

in section 2.08 of this revenue procedure)

must be guaranteed enrollment regardless

of their medical status and must be permit-

ted to remain enrolled so long as they pay

the premium;

(2) No preexisting condition restriction

may be imposed on qualifying individuals;

(3) The premium charged for a qualify-ing individual may not be greater than the

premium for a similarly situated individual

who is not a qualifying individual; and

(4) Benefits for qualifying individuals

are the same as (or substantially similar to)

the benefits provided to similarly situated

individuals who are not qualifying individ-

uals.

.08 Qualifying individuals are HCTC

eligible individuals who have at least 3

months of creditable coverage (within

the meaning of 9801 of the Code) prior to

seeking enrollment in coverage describedin paragraphs (2) through (8) of section

2.05 of this revenue procedure.

SECTION 3. PROCEDURE FOR

ELECTING TREATMENT AS

QUALIFIED HEALTH INSURANCE

.01 This section sets forth the proce-

dures that a state must follow in order

to elect to have coverage described in

paragraphs (2) through (8) of section 2.05

of this revenue procedure (state-based

continuation coverage or coverage underother state-based plans) treated as qual-

ified health insurance. As described in

section 2.07 of this revenue procedure,

such coverage is not qualified health in-

surance unless such an election is made.

.02 To make an election, a state must

provide a letter that contains the following

information:

(1) Identifies and is signed by the gov-

ernor or other state official responsible for

implementing this decision, including ad-

dress and telephone number;

(2) Specifies the category or categories

of health coverage chosen by the state

(from among the categories described in

paragraphs (2) through (8) of section 2.05

of this revenue procedure (state-based

continuation coverage or other state-based

plans));

(3) Provides the name and policy form

number or other unique identifier for each

qualifying plan in each category, and pro-

vides a name and contact number for the

plan administrator or insurance carrier of-

ficial who can provide additional informa-

tion, if necessary. This information is re-

quired only for coverage described in para-

graphs (3) through (8) of section 2.05 of

this revenue procedure; it need not be pro-

vided for state-based continuation cover-

age described in paragraph (2) of section

2.05 of this revenue procedure; and(4) Certifies that the four requirements

described in section 2.07 of this revenue

procedure are met for each plan being

elected under each category.

.03 The letter must be sent to:

Director, Health Coverage Tax Credit

Internal Revenue Service

1111 Constitution Ave., N.W.

W:HCTC/CNN 750

Washington, D.C. 20224

SECTION 4. EFFECTIVE DATE

This revenue procedure is effective

March 1, 2004. Elections made before the

effective date of this revenue procedure

continue to be effective, including those

sent to a different address; they do not

need to be renewed.

SECTION 5. PAPERWORK

REDUCTION ACT

The collection of information con-

tained in this revenue procedure has beenreviewed and approved by the Office

of Management and Budget in accor-

dance with the Paperwork Reduction Act

(44 U.S.C. 3507) under control number

15451875.

An agency may not conduct or sponsor,

and a person is not required to respond

to, a collection of information unless the

collection of information displays a valid

OMB control number.

The collection of information in thi

revenue procedure is in section 3. This in

formation will be used to determine if

state health plan is qualified health insur

ance for purposes of the HCTC. This in

formation collection is voluntary. If a stat

makes an election, eligible residents of th

state may be able to more easily find qual

ified health insurance for which they can

claim the HCTC.

The likely respondents are states. Th

estimated total annual reporting burden i

26 hours. The estimated annual burden pe

respondent varies from 1/4 hour to 1 hour

depending on individual circumstances

with an estimated average of 1/2 hour. Th

estimated total number of respondents i

51. The estimated frequency of response

is one-time.

Books or records relating to a collectio

of information must be retained as long

as their contents may become material ithe administration of any internal revenu

law. Generally tax returns and tax retur

information are confidential, as require

by 26 U.S.C. 6103.

DRAFTING INFORMATION

The principal author of this revenu

procedure is Shoshanna Tanner of the Of

fice of Division Counsel/Associate Chie

Counsel (Tax Exempt and Governmen

Entities). For further information re

garding this revenue procedure, contacMr. Stephen Finan at (202) 622144

or Ms. Tanner at (202) 6226080 (no

toll-free numbers).

26 CFR 601.201: Rulings and determination letters

(Also, Part I, 25, 103, 143.)

Rev. Proc. 200418

SECTION 1. PURPOSE

This revenue procedure provides issuers of qualified mortgage bonds, a

defined in section 143(a) of the Interna

Revenue Code, and issuers of mortgag

credit certificates, as defined in sectio

25(c), with (1) the nationwide averag

purchase price for residences located i

the United States, and (2) average are

purchase price safe harbors for residence

located in statistical areas in each state

the District of Columbia, Puerto Rico

2004-9 I.R.B. 529 March 1, 200


11/27

the Northern Mariana Islands, American

Samoa, the Virgin Islands, and Guam.

SECTION 2. CHANGES

Average area purchase price safe har-

bors were last published in Rev. Proc.

9455, 19942 C.B. 716, and were based

on housing price estimates calculated by

the Department of Housing and Urban De-velopment from mortgage data collected

by the Federal Housing Finance Board

(FHFB). As more fully described in sec-

tion 3 below, the average area purchase

price safe harbors contained in this rev-

enue procedure are based on the annual

loan limits set by the Federal Housing

Administration (FHA) on FHA-insured

mortgages (FHA loan limits). Because

FHA loan limits do not differentiate be-

tween new and existing residences, this

revenue procedure sets forth a single aver-

age area purchase price that may be used

as a safe harbor for both new and existing

residences in each of the listed statistical

areas. This revenue procedure also sets

forth a single nationwide average purchase

price.

This revenue procedure also reflects

the Office of Management and Budgets

(OMB) current definitions for the nations

metropolitan statistical areas (MSAs), as

contained in OMB Bulletin No. 0304,

dated and effective June 6, 2003. The safe

harbors provided in Rev. Proc. 9455were for MSAs defined in OMB Bulletin

No. 9317, dated and effective June 30,

1993.

SECTION 3. BACKGROUND

.01 Section 103(a) provides that, except

as provided in section 103(b), gross in-

come does not include interest on any state

or local bond. Section 103(b)(1) provides

that section 103(a) shall not apply to any

private activity bond that is not a qualified

bond within the meaning of section 141.Section 141(e) provides, in part, that the

term qualified bond means any private

activity bond if such bond (1) is a quali-

fied mortgage bond under section 143, (2)

meets the volume cap requirements under

section 146, and (3) meets the applicable

requirements under section 147.

.02 Section 143(a)(1) provides that the

term qualified mortgage bond means a

bond that is issued as part of a qualified

mortgage issue. Section 143(a)(2)(A) pro-

vides that the term qualified mortgage is-

sue means an issue of one or more bonds

by a state or political subdivision thereof,

but only if: (i) all proceeds of the issue (ex-

clusive of issuance costs and a reasonably

required reserve) are to be used to finance

owner-occupied residences; (ii) the issue

meets the requirements of subsections (c),

(d), (e), (f), (g), (h), (i), and (m)(7) of sec-

tion 143; (iii) the issue does not meet the

private business tests of paragraphs (1) and

(2) of section 141(b); and (iv) with respect

to amounts received more than 10 years

after the date of issuance, repayments of

$250,000 or more of principal on mortgage

financing provided by the issue are used by

the close of the first semiannual period be-

ginning after the date the prepayment (or

complete repayment) is received to redeem

bonds that are part of the issue.

Average Area Purchase Price

.03 Section 143(e)(1) provides that an

issue of bonds meets the purchase price

requirements of section 143(e) if the ac-

quisition cost of each residence financed

by the issue does not exceed 90 percent of

the average area purchase price applicable

to such residence. Section 143(e)(5) pro-

vides that, in the case of a targeted area res-

idence (as defined in section 143(j)), sec-

tion 143(e)(1) shall be applied by substi-

tuting 110 percent for 90 percent..04 Section 143(e)(2) provides that the

term average area purchase price means,

with respect to any residence, the average

purchase price of single-family residences

(in the statistical area in which the resi-

dence is located) that were purchased dur-

ing the most recent 12month period for

which sufficient statistical information is

available. Under sections 143(e)(3) and

(4), respectively, separate determinations

are to be made for new and existing resi-

dences, and for two-, three-, and four-fam-

ily residences..05 Section 143(e)(2) provides that the

determination of the average area purchase

price for a statistical area shall be made as

of the date on which the commitment to

provide the financing is made or, if earlier,

the date of the purchase of the residence.

.06 Section 143(k)(2)(A) provides that

the term statistical area means (i) a

metropolitan statistical area (MSA), and

(ii) any county (or the portion thereof)

that is not within an MSA. Section

143(k)(2)(C) further provides that if suf-

ficient recent statistical information with

respect to a county (or portion thereof)

is unavailable, the Secretary may sub-

stitute another area for which there is

sufficient recent statistical information for

such county (or portion thereof). In the

case of any portion of a State which is

not within a county, section 143(k)(2)(D)

provides that the Secretary may designate

as a county any area that is the equivalent

of a county. Section 6a.103A1(b)(4)(i)

of the Temporary Income Tax Regulations

(issued under section 103A of the Internal

Revenue Code of 1954, the predecessor of

section 143) provides that the term State

includes a possession of the United States

and the District of Columbia.

.07 Section 6a.103A2(f)(5)(i) pro-

vides that an issuer may rely upon the av-

erage area purchase price safe harbors pub-lished by the Department of the Treasury

for the statistical area in which a residence

is located. Section 6a.103A2(f)(5)(i)

further provides that an issuer may use

an average area purchase price limitation

different from the published safe harbor if

the issuer has more accurate and compre-

hensive data for the statistical area.

Qualified Mortgage Credit Certificate

Program

.08 Section 25(c) permits a state orpolitical subdivision to establish a quali-

fied mortgage credit certificate program.

In general, a qualified mortgage credit

certificate program is a program under

which the issuing authority elects not to

issue an amount of private activity bonds

that it may otherwise issue during the

calendar year under section 146, and in

their place, issues mortgage credit certifi-

cates to taxpayers in connection with the

acquisition of their principal residences.

Section 25(a)(1) provides, in general, that

the holder of a mortgage credit certificatemay claim a federal income tax credit

equal to the product of the credit rate

specified in the certificate and the interest

paid or accrued during the tax year on the

remaining principal of the indebtedness

incurred to acquire the residence. Section

25(c)(2)(A)(iii)(III) generally provides

that residences acquired in connection

with the issuance of mortgage credit cer-

March 1, 2004 530 2004-9 I.R.B.


12/27

tificates must meet the purchase price

requirements of section 143(e).

Income Limitations for Qualified

Mortgage Bonds and Mortgage Credit

Certificates

.09 Section 143(f) imposes limitations

on the income of mortgagors for whom

financing may be provided by qualified

mortgage bonds. In addition, section

25(c)(2)(A)(iii)(IV) provides that holders

of mortgage credit certificates must meet

the income requirement of section 143(f).

Generally, under sections 143(f)(1) and

25(c)(2)(A)(iii)(IV), the income require-

ment is met only if all owner-financing

under a qualified mortgage bond and all

mortgage credit certificates issued under a

qualified mortgage credit certificate pro-

gram are provided to mortgagors whose

family income is 115 percent or less of theapplicable median family income. Section

143(f)(5), however, generally provides

for an upward adjustment to the percent-

age limitation in high housing cost areas.

High housing cost areas are defined in

section 143(f)(5)(C) as any statistical area

for which the housing cost/income ratio is

greater than 1.2.

.10 Under section 143(f)(5)(D), the

housing cost/income ratio with respect to

any statistical area is determined by divid-

ing (a) the applicable housing price ratio

for such area by (b) the ratio that the areamedian gross income for such area bears

to the median gross income for the United

States. The applicable housing price ratio

is the new housing price ratio (new hous-

ing average area purchase price divided by

the new housing average purchase price

for the United States) or the existing hous-

ing price ratio (existing housing average

area purchase price divided by the existing

housing average purchase price for the

United States), whichever results in the

housing cost/income ratio being closer to

1.

Average Area and Nationwide Purchase

Price Limitations

.11 Average area purchase price safe

harbors for each state and the District

of Columbia were last published in Rev.

Proc. 9455, 19942 C.B. 716. Aver-

age area purchase price safe harbors for

Puerto Rico, Guam, and the Virgin Islands

were last published in Rev. Proc. 9315,

19931 C.B. 485. Average area purchase

price safe harbors for the Northern Mar-

iana Islands were last published in Rev.

Proc. 8719, 19871 C.B. 712. Aver-

age area purchase price safe harbors for

American Samoa have not been published

previously.

.12 Nationwide average purchase price

limitations were last published in Rev.

Proc. 9455. Guidance with respect to

the United States and area median gross

income figures that are to be used in

computing the housing cost/income ratio

described in section 143(f)(5) was last

published in Rev. Proc. 200329, 20031

C.B. 917.

.13 In Rev. Proc. 9455, the average

area purchase price safe harbors were

based on housing price estimates derived

from mortgage survey data collected by

the FHFB. This revenue procedure usesFHA loan limits for a given statistical

area to calculate the average area purchase

price safe harbor for that area. FHA sets

limits on the dollar value of loans it will

insure based on median home prices and

conforming loan limits established by the

Federal Home Loan Mortgage Corpora-

tion. In particular, FHA sets an areas

loan limit at 95 percent of the median

home sales price for the area, subject to

certain floors and caps measured against

conforming loan limits.

.14 To calculate the average area pur-chase price safe harbors in this revenue

procedure, the FHA loan limits are ad-

justed to take into account the differences

between average and median purchase

prices. Because FHA loan limits do not

differentiate between new and existing

residences, this revenue procedure con-

tains a single average area purchase price

safe harbor for both new and existing

residences in a statistical area. The Trea-

sury Department and the Internal Revenue

Service have determined that FHA loan

limits provide a reasonable basis for de-termining average area purchase price

safe harbors. If the Treasury Department

and the Internal Revenue Service become

aware of other sources of average purchase

price data, including data that differentiate

between new and existing residences, con-

sideration will be given as to whether such

data provide a more accurate method for

calculating average area purchase price

safe harbors.

.15 The average area purchase pric

safe harbors listed in section 5.01 of thi

revenue procedure are based on FHA loan

limits released December 31, 2003. FHA

loan limits are available for statistical ar

eas in each state, the District of Columbia

Puerto Rico, the Northern Mariana Islands

American Samoa, the Virgin Islands, an

Guam. See section 4.03 of this revenu

procedure with respect to FHA loan lim

its revised after December 31, 2003.

.16 OMB Bulletin No. 0304, date

and effective June 6, 2003, revised the def

initions of the nations metropolitan area

and recognized 49 new metropolitan statis

tical areas. As a result, this revenue proce

dure provides average area purchase pric

safe harbors for statistical areas that diffe

from those published in Rev. Proc. 9455

For example, OMB Bulletin No. 030

does not include primary metropolitan sta

tistical areas, a type of statistical area thawas included in Rev. Proc. 9455.

SECTION 4. APPLICATION

Average Area Purchase Price Safe

Harbors

.01 Average area purchase price saf

harbors for statistical areas in each state

the District of Columbia, Puerto Rico

the Northern Mariana Islands, America

Samoa, the Virgin Islands, and Guam ar

set forth in section 5.01 of this revenuprocedure. Average area purchase pric

safe harbors are provided for single-fam

ily and two to four-family residences. Fo

each type of residence, section 5.01 of thi

revenue procedure contains a single saf

harbor that may be used for both new an

existing residences. Issuers of qualifie

mortgage bonds and issuers of mortgag

credit certificates may rely on these saf

harbors to satisfy the requirements of sec

tions 143(e) and (f). Section 5.01 of thi

revenue procedure provides safe harbor

for MSAs, and for certain counties ancounty equivalents. If no purchase pric

safe harbor is available for a statistica

area, the safe harbor for ALL OTHE

AREAS may be used for that statistica

area (except for Alaska, for which a sepa

rate safe harbor is provided for statistica

areas not listed).

.02 If a residence is in an MSA, the saf

harbor applicable to it is the limitation o

that MSA. If an MSA falls in more than

2004-9 I.R.B. 531 March 1, 200


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one State, the MSA is listed in section 5.01

of this revenue procedure under each State.

.03 If the FHA revises the FHA loan

limit for any statistical area after Decem-

ber 31, 2003, an issuer of qualified mort-

gage bonds or mortgage credit certificates

may use the revised FHA loan limit for that

statistical area to compute (as provided in

the next sentence) a revised average area

purchase price safe harbor for the statisti-

cal area provided that the issuer maintains

records evidencing the revised FHA loan

limit. The revised average area purchase

price safe harbor for that statistical area

is computed by dividing the revised FHA

loan limit by .76.

.04 If, pursuant to section 6a.103A

2(f)(5)(i), an issuer uses more accurate and

comprehensive data to determine the av-

erage area purchase price for a statistical

area, the issuer must make separate aver-

age area purchase price determinations fornew and existing residences. Moreover,

when computing the average area purchase

price for a statistical area that is an MSA,

as defined in OMB Bulletin No. 0304,

the issuer must make the computation for

the entire applicable MSA. When comput-

ing the average area purchase price for a

statistical area that is not an MSA, the is-

suer must make the computation for the en-

tire statistical area and may not combine

statistical areas. Thus, for example, the is-

suer may not combine two or more coun-

ties.

.05 If an issuer receives a ruling permit-

ting it to rely on an average area purchase

price limitation that is higher than the

applicable safe harbor in this revenue pro-

cedure, the issuer may rely on that higher

limitation for the purpose of satisfying

the requirements of section 143(e) and (f)

for bonds sold, and mortgage credit cer-

tificates issued, not more than 30 months

following the termination date of the

12month period used by the issuer to

compute the limitation.

Nationwide Average Purchase Price

.06 Section 5.02 of this revenue proce-

dure sets forth a single nationwide average

purchase price for purposes of computing

the housing cost/income ratio under sec-

tion 143(f)(5)..07 Issuers must use the nationwide av-

erage purchase price set forth in section

5.02 of this revenue procedure when com-

puting the housing cost/income ratio un-

der section 143(f)(5) regardless of whether

they are relying on the average area pur-

chase price safe harbors contained in this

revenue procedure or using more accurate

and comprehensive data to determine av-

erage area purchase prices for new and ex-

isting residences for a statistical area that

are different from the published safe har-

bors in this revenue procedure.

.08 If, pursuant to section 7.02 of this

revenue procedure, an issuer relies on the

average area purchase price safe harbors

contained in Rev. Proc. 9455, the issuer

must use the nationwide average purchase

prices set forth in Rev. Proc. 9455 in

computing the housing cost/income ratio

under section 143(f)(5). Likewise, if, pur-

suant to section 7.05 of this revenue pro-

cedure, an issuer relies on the nationwide

average purchase prices published in Rev.

Proc. 9455, the issuer may not rely on

the average area purchase price safe har-

bors published in this revenue procedure.

SECTION 5. AVERAGE AREA AND

NATIONWIDE AVERAGE PURCHASE

PRICES

.01 Average area purchase prices for

single-family and two to four-family res-

idences in MSAs, and for certain counties

and county equivalents. The safe harbor

for ALL OTHER AREAS (found at the

end of the table below) may be used for a

statistical area that is not listed below (ex-

cept for Alaska, for which a separate safe

harbor is provided for statistical areas not

listed).

Area Name 1 Family 2 Family 3 Family 4 Family

ALASKAANCHORAGE, AK (MSA) $277,500 $312,553 $379,737 $438,158All other areas in Alaska $250,000 $281,579 $342,105 $405,253

ARIZONAFLAGSTAFF, AZ (MSA) $228,325 $269,779 $326,084 $405,253MOHAVE COUNTY, AZ $230,375 $269,779 $326,084 $405,253

CALIFORNIAINYO COUNTY, CA $353,750 $398,434 $484,079 $558,553CHICO, CA (MSA) $231,875 $269,779 $326,084 $405,253HUMBOLDT COUNTY, CA $212,500 $269,779 $326,084 $405,253

FRESNO, CA (MSA) $214,521 $269,779 $326,084 $405,253LOS ANGELES-LONG BEACH-SANTA ANA,

CA (MSA) $381,999 $488,975 $591,028 $734,521

MADERA, CA (MSA) $214,521 $269,779 $326,084 $405,253MERCED, CA (MSA) $231,250 $269,779 $326,084 $405,253MODESTO, CA (MSA) $290,475 $327,166 $397,492 $458,645NAPA, CA (MSA) $381,999 $488,975 $591,028 $710,526OXNARD-THOUSAND OAKS-VENTURA, CA

(MSA) $381,999 $488,975 $591,028 $734,521

TUOLUMNE COUNTY, CA $243,750 $274,539 $333,553 $405,253REDDING, CA (MSA) $228,092 $269,779 $326,084 $405,253

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RIVERSIDE-SAN BERNARDINO-ONTARIO,

CA (MSA) $321,250 $361,829 $439,605 $507,237

SACRAMENTO-ARDEN-ARCADE-

ROSEVILLE, CA (MSA) $369,407 $464,605 $564,474 $651,316

SALINAS, CA (MSA) $381,999 $488,975 $591,028 $734,521SAN DIEGO-CARLSBAD-SAN MARCOS, CA

(MSA) $381,999 $488,975 $591,028 $734,521

SAN FRANCISCO-OAKLAND-FREMONT, CA(MSA) $381,999 $488,975 $591,028 $734,521

SAN JOSE-SUNNYDALE-SANTA CLARA, CA

(MSA) $381,999 $488,975 $591,028 $734,521

SAN LUIS OBISPO-PASA ROBLES, CA (MSA) $381,999 $488,975 $591,028 $710,329SANTA BARBARA-SANTA MARIA-GOLETA,

CA (MSA) $381,999 $488,975 $591,028 $690,789

SANTA CRUZ-WATSONVILLE, CA (MSA) $381,999 $488,975 $591,028 $734,521SANTA ROSA-PETALUMA, CA (MSA) $381,999 $488,975 $591,028 $734,521STOCKTON, CA (MSA) $344,222 $397,730 $483,224 $557,566NEVADA COUNTY, CA $312,500 $351,974 $427,632 $493,421MENDOCINO COUNTY, CA $312,500 $351,974 $427,632 $493,421VALLEJO-FAIRFIELD, CA (MSA) $381,999 $488,975 $591,028 $710,526YUBA CITY-MARYSVILLE, CA (MSA) $275,000 $309,737 $376,316 $434,211AMADOR COUNTY, CA $218,750 $269,779 $326,084 $405,253MONO COUNTY, CA $344,222 $399,079 $484,934 $559,539

COLORADOBOULDER, CO (MSA) $369,407 $438,453 $532,699 $614,653COLORADO SPRINGS, CO (MSA) $260,500 $293,405 $356,474 $411,316DENVER-AURORA, CO (MSA) $344,222 $440,609 $532,532 $631,579LA PLATA COUNTY, CO $211,250 $269,779 $326,084 $405,253EAGLE COUNTY, CO $344,222 $440,609 $532,532 $661,829LAKE COUNTY, CO $344,222 $440,609 $532,532 $661,829FORT COLLINS-LOVELAND, CO (MSA) $280,000 $315,368 $383,158 $442,105GREELEY, CO, (MSA) $286,875 $323,112 $392,566 $452,961SILVERTHRONE, CO (MSA) $344,222 $401,250 $487,500 $562,500GARFIELD COUNTY, CO $250,000 $286,825 $346,678 $430,855

GRAND COUNTY, CO $242,500 $273,132 $331,842 $405,253GUNNISON COUNTY, CO $259,938 $292,772 $355,704 $410,428OURAY COUNTY, CO $262,500 $295,658 $359,211 $414,474PITKIN COUNTY, CO $224,161 $286,825 $346,678 $430,855ROUTT COUNTY, CO $270,000 $304,105 $369,474 $426,316SAN MIGUEL COUNTY, CO $344,222 $401,250 $487,500 $562,500

CONNECTICUTBRIDGEPORT-STAMFORD-NORWALK, CT

(MSA) $381,999 $434,964 $528,462 $609,764

HARTFORD-EAST HARTFORD-WEST

HARTFORD, CT (MSA) $309,375 $348,454 $423,355 $488,487

NEW HAVEN-MILFORD, CT (MSA) $381,999 $435,039 $528,553 $609,868

NEW LONDON-NORWICH, CT (MSA) $268,750 $302,697 $367,763 $430,855LITCHFIELD COUNTY, CT $255,000 $287,211 $348,947 $405,253WINDHAM COUNTY, CT $224,161 $269,779 $326,084 $405,253

DELAWAREDOVER, DE (MSA) $224,375 $269,779 $326,084 $405,253PHILADELPHIA-CAMDEN-WILMINGTON,

PA-NJ-DE-MD (MSA) $300,459 $338,412 $411,154 $474,409

DISTRICT OF COLUMBIAWASHINGTON-ARLINGTON-ALEXANDRIA,

DC-VA-MD-WV (MSA) $381,999 $448,442 $544,837 $628,658

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FLORIDAJACKSONVILLE, FL (MSA) $275,000 $309,737 $376,316 $434,211MONROE COUNTY, FL $369,407 $449,822 $546,513 $630,592

MIAMI-FORT LAUDERDALE-MIAMI

BEACH, FL (MSA) $311,625 $350,988 $426,434 $492,039

NAPLES-MARCO ISLAND, FL (MSA) $282,500 $318,184 $386,579 $446,053SARASOTA-BRADENTON-VENICE, FL

(MSA) $251,500 $283,268 $344,158 $405,253

GEORGIAALBANY, GA (MSA) $213,125 $269,779 $326,084 $405,253ATHENS-CLARKE COUNTY, GA (MSA) $232,375 $269,779 $326,084 $405,253ATLANTA-SANDY SPRINGS-MARIETTA, GA

(MSA) $232,375 $269,779 $326,084 $405,253

HAWAIIHONOLULU, HI (MSA) $490,625 $552,599 $671,382 $774,671HAWAII COUNTY, HI $278,750 $313,961 $381,447 $440,132MAUI COUNTY, HI $381,250 $429,408 $521,711 $601,974KAUAI COUNTY, HI $368,750 $415,329 $504,605 $582,237

KALAWAO COUNTY, HI $239,400 $306,379 $370,326 $460,232

IDAHOBLAINE COUNTY, ID $336,250 $378,724 $460,132 $530,921

ILLINOISCHICAGO-NAPERVILLE-JOILET, IL-IN-WI

(MSA) $312,500 $351,974 $427,632 $493,421

ST. LOUIS, MO-IL (MSA) $243,974 $274,792 $333,859 $405,253

INDIANAANDERSON, IN (MSA) $217,500 $269,779 $326,084 $405,253CHICAGO-NAPERVILLE-JOILETTE, IL-IN-WI

(MSA) $312,500 $351,974 $427,632 $493,421

CINCINNATI-MIDDLETOWN, OH-KY-IN(MSA) $235,646 $269,779 $326,084 $405,253

INDIANAPOLIS, IN (MSA) $217,500 $269,779 $326,084 $405,253LOUISVILLE, KY-IN (MSA) $237,375 $269,779 $326,084 $405,253SCOTT COUNTY, IN $237,375 $269,779 $326,084 $405,253

KANSASKANSAS CITY, MO-KS (MSA) $256,250 $288,618 $350,658 $405,253LAWRENCE, KS (MSA) $221,813 $269,779 $326,084 $405,253

KENTUCKYCINCINNATI-MIDDLETOWN, OH-KY-IN

(MSA) $235,646 $269,779 $326,084 $405,253

LOUISVILLE, KY-IN (MSA) $237,375 $269,779 $326,084 $405,253

MAINEPORTLAND-SOUTH PORTLAND, ME (MSA) $296,250 $333,671 $405,395 $467,763

MARYLANDBALTIMORE-TOWSON, MD (MSA) $344,222 $389,557 $473,292 $546,107HAGERSTOWN-MARTINSBURG, MD (MSA) $355,000 $399,842 $485,789 $560,526ST. MARYS COUNTY, MD $241,250 $271,724 $330,132 $405,253PHILADELPHIA-CAMDEN-WILMINGTON,

PA-NJ-DE-MD, (MSA) $300,459 $338,412 $411,154 $474,409

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WASHINGTON-ARLINGTON-ALEXANDRIA,

DC-MD-VA-WV (MSA) $381,999 $448,442 $544,837 $628,658

MASSACHUSETTSBARNSTABLE TOWN, MA (MSA) $374,875 $422,228 $512,987 $591,908BOSTON-CAMBRIDGE-QUINCY, MA-NH

(MSA) $381,999 $488,975 $591,028 $734,521

PITTSFIELD, MA (MSA) $237,500 $269,779 $326,084 $405,253PROVIDENCE-NEW BEDFORD-FALL RIVER,

RI-MA (MSA) $369,407 $472,891 $571,567 $710,309

SPRINGFIELD, MA (MSA) $237,500 $269,779 $326,084 $405,253WORCESTER, MA (MSA) $381,999 $488,975 $591,028 $734,521DUKES COUNTY, MA $344,222 $440,609 $532,532 $661,829NANTUCKET COUNTY, MA $344,222 $440,609 $532,532 $661,829

MICHIGANLENAWEE COUNTY $297,500 $335,079 $407,105 $469,737ANN ARBOR, MI (MSA) $297,500 $335,079 $407,105 $469,737DETROIT-WARREN-LIVONIA, MI (MSA) $297,500 $335,079 $407,105 $469,737LANSING-EAST LANSING, MI (MSA) $250,000 $281,579 $342,105 $405,253MONROE, MI (MSA) $231,250 $269,779 $326,084 $405,253

BENZIE COUNTY, MI $224,161 $270,937 $327,483 $407,022GRAND TRAVERSE COUNTY, MI $224,161 $270,937 $327,483 $407,022KALKASKA COUNTY, MI $224,161 $270,937 $327,483 $407,022LEELANAU COUNTY, MI $224,161 $270,937 $327,483 $407,022

MINNESOTAMINNEAPOLIS-ST. PAUL-BLOOMINGTON,

MN-WI (MSA) $291,000 $327,758 $398,211 $459,474

GOODHUE COUNTY, MN $224,875 $269,779 $326,084 $405,253ROCHESTER, MN (MSA) $230,962 $269,779 $326,084 $405,253

MISSISSIPPIJACKSON, MS (MSA) $220,000 $269,779 $326,084 $405,253

MISSOURIKANSAS CITY, MO-KS (MSA) $256,250 $288,618 $350,658 $405,253ST. LOUIS, MO-IL (MSA) $243,974 $274,791 $333,858 $405,253

MONTANAMISSOULA, MT (MSA) $241,250 $271,724 $330,132 $405,253

NEVADACARSON CITY, NV (MSA) $256,250 $288,618 $350,658 $405,253DOUGLAS COUNTY, NV $350,000 $394,211 $478,947 $552,632LAS VEGAS-PARADISE, NV (MSA) $230,375 $269,779 $326,084 $405,253NYE COUNTY, NV $230,375 $269,779 $326,084 $405,253RENO-SPARKS, NV (MSA) $255,625 $287,914 $349,803 $405,253

NEW HAMPSHIREBOSTON-CAMBRIDGE-QUINCY, MA-NH

(MSA) $381,999 $488,975 $591,028 $734,521

MERRIMACK COUNTY, NH $218,166 $269,779 $326,084 $405,253MANCHESTER-NASHUA, NH (MSA) $369,407 $472,891 $571,567 $710,309

NEW JERSEYALLENTOWN-BETHLEHEM-EASTON, PA-NJ

(MSA) $369,407 $459,255 $557,974 $643,816

ATLANTIC CITY, NJ (MSA) $293,750 $330,855 $401,974 $463,816

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NEW YORK-NEWARK-EDISON, NY-NJ-PA

(MSA) $381,999 $488,975 $591,028 $734,521

OCEAN CITY, NJ (MSA) $293,750 $330,855 $401,974 $463,816PHILADELPHIA-CAMDEN-WILMINGTON,

PA-NJ-DE-MD (MSA) $300,459 $338,412 $411,154 $474,409

TRENTON-EWING, NJ (MSA) $381,250 $429,408 $521,711 $601,974

NEW MEXICOLOS ALAMOS COUNTY, NM $318,750 $359,013 $436,184 $503,289SANTA FE, NM (MSA) $343,125 $386,467 $469,539 $541,776

NEW YORKCAYUGA COUNTY, NY $211,250 $269,779 $326,084 $405,253BUFFALO-CHEEKTOWAGA-TONAWANDA,

NY (MSA) $228,750 $269,779 $326,084 $405,253


(MSA) $381,999 $488,975 $591,028 $734,521

POUGHKEEPSIE-NEWBURGH-

MIDDLETOWN, NY (MSA) $337,500 $380,132 $461,842 $532,895

ROCHESTER, NY (MSA) $218,750 $269,779 $326,084 $405,253SYRACUSE, NY (MSA) $211,250 $269,779 $326,084 $405,253

NORTH CAROLINACHARLOTTE-GASTONIA-CONCORD, NC-SC

(MSA) $221,582 $269,779 $326,084 $405,253

DURHAM, NC (MSA) $230,000 $269,779 $326,084 $405,253JACKSONVILLE, NC (MSA) $306,250 $344,934 $419,079 $483,553LINCOLN COUNTY, NC $221,582 $269,779 $326,084 $405,253RALEIGH-CARY, NC (MSA) $230,000 $269,779 $326,084 $405,253ROWAN COUNTY, NC $221,582 $269,779 $326,084 $405,253VIRGINIA BEACH-NORFOLK-NEWPORT

NEWS, VA-NC (MSA) $286,250 $322,408 $391,711 $451,974

OHIOAKRON, OH (MSA) $223,625 $269,779 $326,084 $405,253ASHTABULA COUNTY, OH $290,797 $327,530 $397,933 $459,154CINCINNATI-MIDDLETOWN, OH-KY-IN

(MSA) $235,646 $269,779 $326,084 $405,253

CLEVELAND-ELYRIA-MENTOR, OH (MSA) $290,797 $327,530 $397,933 $459,154COLUMBUS, OH (MSA) $274,738 $309,441 $375,957 $433,796DAYTON, OH (MSA) $225,000 $269,779 $326,084 $405,253SPRINGFIELD, OH (MSA) $225,000 $269,779 $326,084 $405,253

OREGONCORVALIS, OREGON (MSA) $217,375 $269,779 $326,084 $405,253MEDFORD, OR (MSA) $241,875 $272,428 $330,987 $405,253PORTLAND-VANCOUVER-BEAVERTON,

OR-WA (MSA) $249,875 $286,825 $346,678 $430,855

PENNSYLVANIAALLENTOWN-BETHLEHEM-EASTON, PA-NJ

(MSA) $369,407 $459,255 $557,974 $643,816


(MSA) $381,999 $488,975 $591,028 $734,521

PHILADELPHIA-CAMDEN-WILMINGTON,

PA-NJ-DE (MSA) $300,459 $338,412 $411,154 $474,409

PITTSBURGH, PA (MSA) $228,188 $269,779 $326,084 $405,253READING, PA (MSA) $217,382 $269,779 $326,084 $405,253YORK - HANOVER, PA (MSA) $224,875 $269,779 $326,084 $405,253

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RHODE ISLANDPROVIDENCE-NEW BEDFORD-FALL RIVER,

RI-MA (MSA) $369,407 $472,891 $571,567 $710,309

SOUTH CAROLINACHARLESTON-NORTH CHARLESTON, SC

(MSA) $261,250 $294,250 $357,500 $412,500

CHARLOTTE-GASTONIA-CONCORD, NC-SC(MSA) $221,582 $269,779 $326,084 $405,253

GEORGETOWN COUNTY, SC $228,750 $269,779 $326,084 $405,253BEAUFORT COUNTY, SC $262,500 $295,658 $359,211 $414,474JASPER COUNTY, SC $262,500 $295,658 $359,211 $414,474

TENNESSEENASHVILLE-DAVIDSON-MURFREESBORO,

TN (MSA) $297,500 $335,079 $407,105 $469,737

TEXASHENDERSON COUNTY, TX $224,875 $269,779 $326,084 $405,253AUSTIN - ROUND ROCK, TX (MSA) $233,750 $269,779 $326,084 $405,253HUTCHINSON COUNTY, TX $224,875 $269,779 $326,084 $405,253

DALLAS-FORT WORTH-ARLINGTON, TX(MSA) $224,875 $269,779 $326,084 $405,253

SAN ANGELO, TX (MSA) $224,875 $269,779 $326,084 $405,253

UTAHOGDEN-CLEARFIELD, UT (MSA) $225,000 $269,779 $326,084 $405,253PROVO-OREM, UT (MSA) $231,250 $269,779 $326,084 $405,253SALT LAKE CITY, UT (MSA) $306,250 $344,934 $419,079 $483,553KANE COUNTY, UT $228,325 $269,779 $326,084 $405,253WASATCH COUNTY, UT $231,250 $269,779 $326,084 $405,253

VERMONTBURLINGTON-SOUTH BURLINGTON, VT

(MSA) $281,125 $316,636 $384,697 $443,882

VIRGINIACHARLOTTESVILLE, VA (MSA) $255,416 $287,678 $349,516 $405,253RICHMOND, VA (MSA) $249,938 $281,509 $342,020 $405,253VIRGINIA BEACH-NORFOLK-NEWPORT,

NEWS, VA-NC (MSA) $286,250 $322,408 $391,711 $451,974


DC-MD-VA-WV, (MSA) $381,999 $448,442 $544,837 $628,658

WASHINGTONBELLINGHAM, WA (MSA) $236,250 $269,779 $326,084 $405,253BREMERTON-SILVERDALE, WA (MSA) $262,500 $295,658 $359,211 $414,474MOUNT VERNON-ANACORLES, WA (MSA) $214,934 $269,779 $326,084 $405,253

ISLAND COUNTY, WA $326,868 $368,157 $447,293 $516,108OLYMPIA, WA (MSA) $225,000 $269,779 $326,084 $405,253PORTLAND-VANCOUVER-BEAVERTON,

OR-WA (MSA) $249,875 $286,825 $346,678 $430,855

SEATTLE-TACOMA-BELLVUE, WA (MSA) $345,125 $388,720 $472,276 $544,934JEFFERSON COUNTY, WA $212,500 $269,779 $326,084 $405,253SAN JUAN COUNTY, WA $260,028 $292,874 $355,828 $430,855

WEST VIRGINIAHAGERSTOWN-MARTINSBURG, MD-WV

(MSA) $355,000 $399,842 $485,789 $560,526

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DC-VA-MD-WV (MSA) $381,999 $448,442 $544,837 $628,658

WISCONSINCHICAGO-NAPERVILLE-JOILETT, IL-IN-WI

(MSA) $312,500 $351,974 $427,632 $493,421

MADISON, WI (MSA) $242,625 $273,272 $332,013 $405,253

MILWAUKEE-WAUKESHA-WEST ALLIS, WI(MSA) $233,125 $269,779 $326,084 $405,253

MINNEAPOLIS-ST. PAUL-BLOOMINGTON,

MN-WI (MSA) $291,000 $327,758 $398,211 $459,474

RACINE, WI (MSA) $233,125 $269,779 $326,084 $405,253

WYOMINGTETON COUNTY, WY $369,407 $438,453 $532,699 $614,653SUBLETTE COUNTY, WY $224,375 $269,779 $326,084 $405,253

GUAM $237,500 $269,779 $326,084 $405,253

PUERTO RICOFAJARDO, PR (MSA) $325,000 $366,053 $444,737 $513,158

SAN JUAN-CAGUAS-GUAYNABO, PR (MSA) $325,000 $366,053 $444,737 $513,158

VIRGIN ISLANDSST. CROIX $287,500 $323,816 $393,421 $453,947ST. JOHN $246,447 $277,578 $337,243 $405,253ST. THOMAS $318,750 $359,013 $436,184 $503,289

ALL OTHER AREAS $210,758 $269,779 $326,084 $405,253

.02 Nationwide average purchase price

(for use in the housing cost/income ratio

for new and existing residences):

$218,100

SECTION 6. EFFECT ON OTHER

DOCUMENTS

Rev. Proc. 9455, Rev. Proc. 9315,

and Rev. Proc. 8719 are obsolete except

as provided in section 7 of this revenue

procedure.

SECTION 7. EFFECT

US Internal Revenue Service: irb04-09

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